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Feldsott Lee Pagano & Canfield
Orange County Homeowners Association Law Firm

HOA Board Fails to Pay $994, Loses Its Main Street at Auction

In one of the more interesting stories of the year, the prestigious Presidio Terrace neighborhood in San Francisco has lost one of its main streets and parking areas. The Presidio Homeowners Association apparently failed to pay a total of $994 in back taxes, interest and penalties and a block-long private street was auctioned off two years ago for $90,100.

A pair of real estate investors purchased the street, which is oval in shape and gated into the neighborhood. They have quietly been assessing the situation and determining what to do with the street, which is located down the hill from the Presidio itself and near San Francisco's Gold Coast.

The couple, who currently live in San Jose, would like to build a house in the tony neighborhood, but that may not be practical on property that is currently paved and used for driving and parking on. The street has 120 parking spaces. The investors have also considered charging residents to park there.

The homeowners of Presidio Terrace are not amused. They have sued the two real estate investors and asked the San Francisco Board of Supervisors to rescind the sale. A fall hearing has been scheduled on the matter.

It's not clear, however, that the investors did anything wrong. According to the Mercury News, they discovered the parcel's availability by scanning a long list of properties that were up for auction through the San Francisco tax collector's office.

"In the midst of all this was just this odd property in a great location; the parcel number told you generically what it was: part of Pacific Heights, the right location, land in a good neighborhood. We took a chance," said one of the investors.

They engaged in bidding against 73 others -- and won.

The street they purchased is one of only 181 private streets in San Francisco. It had been homeowner-managed since 1905.

A lawyer for the HOA painted the couple as "savvy real estate professionals" who waited until now to spring the issue on the neighborhood to make it harder to rescind the sale. The HOA claims that tax bills for the neighborhood's common areas had been sent to an accountant the HOA had used in the 1980s, and they never received any notice of delinquency.

This situation demonstrates the importance of ensuring that your HOA's address is up to date and that you are receiving all expected tax bills in regular fashion. These seemingly small details can make a big difference in terms of preventing disputes.

In this case, the underlying tax bill that the neighborhood never paid was for a total of $14.

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